Utah Medicaid expansion: the big fight over SB96 and Prop 3, explained

Utah voters decided to expand Medicaid under the Affordable Care Act in November. But the Republican legislature is scaling back the voter-approved plan.

The Republican legislature has passed legislation that would, in effect, replace the voter-approved Medicaid expansion with a more limited version that would actually cover fewer people while spending more money in the first few years. The bill passed both chambers with a two-thirds majority. It now heads to Republican Gov. Gary Herbert, who is expected to sign it.

GOP lawmakers are making a big bet: that they will be the first state to receive approval from the Trump administration for a partial Medicaid expansion. Originally, the Senate-passed legislation stipulated the entire expansion would have been repealed if the feds rejected Utah’s plan, reversing the will of the voters completely. But the state House, facing intense pressure, changed the bill at the last minute so if the Trump administration does reject partial expansion, the full Medicaid expansion as originally approved by voters would take effect instead.

Expansion supporters have still condemned Republicans for needlessly interceding to institute a scaled-back version of expansion, one will come at a higher initial cost to the state, after Utahns voted decisively just three months ago to expand Medicaid and extend health coverage to tens of thousands of vulnerable people.

“The legislature is trampling on the clear will of voters,” Jonathan Schleifer, executive director of the Fairness Project, which helped push the ballot referendum, said in a statement.

Voters approved full Medicaid expansion. Republicans only want to go partway.

The ballot measure approved by the voters by a 53-47 margin was unambiguous: The state would expand Medicaid to 138 percent of the federal poverty level — about $16,800 for an individual or $29,700 for a family of three — as prescribed in the health care law. It would cover 150,000 of Utah’s poorest people. The state’s share of Medicaid expansion spending (about 10 percent, with the feds picking up the other 90) was to be paid for by an increase in the sales tax.

The legislation approved by Republicans would repeal the ballot referendum and replace it with new provisions to extend Medicaid eligibility up to only 100 percent of the poverty level and the state would have to initially pick up 30 percent of the cost. About 60,000 fewer people would be covered, and Utah would spend $72 million over the next two years. The bill is very similar to a plan Utah Republicans approved last year for a partial Medicaid expansion that did not actually take effect.

Full Medicaid expansion was to be covered entirely by the sales tax increase that was already passed as part of the ballot referendum. That tax was pegged to an earlier estimate of the full expansion’s costs over the first two years, but the state government has since released a new projection that forecasts a $10.4 million shortfall in year three, which Republican leaders have then used to justify pursuing their partial expansion, saying it’s more fiscally responsible. Still, even with that updated estimate, their plan will come with a higher price tag at first.

The only way the Republican plan would save the state money is if they received federal approval to get a 90-10 match, something that hasn’t ever happened before, may not be legally permissible, and is the subject of fierce debate in the Trump administration.

Without such approval, the expansion would have been automatically repealed under the Senate-approved iteration of this plan. The House revised the plan so that, if the Trump administration rejects their partial expansion plan, the full Medicaid expansion that the voters had approved in the first place would go into effect instead.

Utah Republicans are betting that they can get Trump’s sign-off on their plan

Two states, Arkansas and Massachusetts, have already asked the Trump administration to let them shift to a partial Medicaid expansion, covering people up to 100 percent of the poverty line. People above that threshold would have to buy coverage through the private insurance marketplaces set up under the health care law.

But those states haven’t received federal approval, with Trump’s health department remaining silent on this question. As the New York Times’s Robert Pear reported last summer, administration officials have hotly debated the expansion question, with some arguing in its favor (to head off states like Utah deciding to fully expand Medicaid) while others refuse to do anything proactive that would help expand Obamacare’s coverage to more people.

Utah Republicans have nevertheless sounded confident about their plan’s prospects in Washington, stating outright that they have assurances from anonymous Trump officials that the waiver to get the 90 percent federal match would be approved. As UtahPolicy.com, a local news outlet, reported this week:

One Republican lawmaker involved in the planning for SB96 tells UtahPolicy.com that they met with a top official from CMS (The Centers for Medicaid and Medicare Service) two days before the start of this year’s session. During the meeting, they were told CMS is developing a “special waiver” for states to give them the 90/10 cost split if they implement limited Medicaid expansion, even if the plan includes caps or work requirements as Utah’s plan does. The lawmaker asked that we withhold their name.

Republicans say privately they’re extremely confident that Utah, and other states, will be awarded this new waiver sometime in the 12 months following implementation of their Medicaid expansion, allowing the 90/10 cost breakdown while giving health care to fewer people than the full expansion under Prop. 3. That means SB96 is essentially a “bridge” program to fund expansion until that happens.

Based on the Utah bill text, GOP lawmakers seem to think they’ve found a loophole: By accepting spending caps (the long-rumored goal of top Trump health officials) for their Medicaid expansion, they can get federal approval where Arkansas and Massachusetts, which actually sought to scale back from full to partial expansion, have not.

But Eliot Fishman, who worked on Medicaid waivers under President Barack Obama and now works at Families USA, said this provision is a fundamental misreading of the Centers for Medicare and Medicaid Services’ discretion under federal law. If Utah can get a federal waiver to cover somebody in poverty and receive a 90 percent match, then Massachusetts must be able to receive the deal.

“What they definitely cannot do is say: We are exercising state-by-state discretion based on other criteria,” he told me, “which is what Utah seems to be assuming.”

Massachusetts could then sue if Utah’s waiver is approved. Litigation was likely to follow anyway from supporters of the ballot referendum if Utah Republicans move ahead with their plan. The state could be walking into a legal landmine — all in the name of extending health insurance to fewer people than the plan already approved by the state’s voters, and at a higher initial cost.

But the Republican legislature still pushed onward in the hope of beating back Obamacare’s unlikely victory last fall in this conservative state. Health insurance for thousands of the state’s most vulnerable residents hangs in the balance.

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